Figures from LSL, the largest network of lettings agents, showed that the total amount of rent that is unpaid or late has improved by £6 million in a month. The company said it was part of a "clear long term trend", rather than a monthly blip, as tenants are "focusing on deleveraging and shedding their bad debts".
The figures also showed a slight cooling in rent increases. The average rent in England and Wales has risen by 0.1pc since April, to £737 per month. This is slower than the average monthly increase of 0.3pc over the previous twelve months. However, the latest increase still leaves rents up 3.5pc up on an annual basis – and brings rents in May to the third highest level on record.
Rents have been rising due to many first-time buyers struggling to get onto the property ladder. However, figures from the Council of Mortgage Lenders (CML) show that first-time buyers are beginning to get mortgage approvals again, suggesting that rents could fall in future.
"Despite a strong increase in new tenants, rents rose more slowly than other household costs," Mr Newnes said. "But that demand would have been even stronger had it not been for a recent spurt in the number of first-time buyers. Looking further ahead, sustaining the increase in new buyers will depend on how many tenants are able to build big enough deposits to get a mortgage. With wage growth so weak compared to inflation and house price growth, it looks like deposits will become less affordable – which will keep demand for rented accommodation high."
Mortgages for landlords are becoming cheaper than ever, with Nationwide subsidiary The Mortgage Works launching a 2.49pc buy-to-let mortgage for those with a 40pc deposit. "This is the lowest 2 year fixed rate for Buy to Let borrowers and is another indication of just how competitive the market is. That competition has been leading to lower rates and that trend shows no sign of slowing," said David Hollingworth from London & Country. He predicted that rates for buy-to-let mortgages would continue to fall. "In order to keep their position lenders will either have to carry on cutting the price of their products or perhaps alter criteria."
Analysis by Sequence, a national chain of estate agents that trades under brands like Barnard Marcus and Fox & Sons, found last month that applications for buy to let mortgages have almost doubled in the past two years and have jumped by 11pc since March alone.
Danny Gabay, a director of Fathom Consulting, has described FLS as "funding for letting" and claimed it is contributing to growth in "the buy-to-let sector at the expense of first time buyers".